Privatising Alibaba.com: A good deal for the Alibaba Group

The Alibaba Group has a rather curious plan to privatise its Hong Kong-listed subsidiary, Alibaba.com. The company was listed in Hong Kong in November 2007 with great fanfare.

The IPO price was HK$13.50. Now, almost five year later, the Alibaba Group wants to de-list the company and the Group is offering investors... HK$13.50 per share. Same price, five years later. Yesterday, proxy advisory firm, Glass Lewis, opined the Alibaba Group's offer should be accepted by investors of Alibaba.com.

In 2007, Alibaba.com's revenues were RMB 2.16 billion. In 2011, revenues were RMB 6.42 billion. An overall increase of just under 200%.

In 2007, net profit was RMB 968 million. In 2011, Alibaba.com's net profit was RMB 1.71 billion. An overall increase of 77%.

So, revenues are up 200%. Net profit is up 77%. And the buyback share price is up 0%.

How is that a good deal for anyone other than Alibaba Group shareholders?

But I guess if Jack Ma can manage to transfer Alipay out of the Alibaba Group and into a private company that he happens to control, I probably should not be against him on his plan to privatise Alibaba.com.

(Alibaba.com's annual reports can be found here.)